Steel tariffs loom as US defies co-operation call

Despite governmental co-operation between the US and Europe in the war against terrorism, a transatlantic rift over steel imports looks set to get worse in the coming weeks.

The US International Trade Commission ruled last week that steel imports from Europe and elsewhere were causing ‘injury’ to its domestic industry.

Many on this side of the Atlantic had hoped that the coalition formed in the wake of September 11 might also encourage the US to take a more multilateral approach on issues other than security.

But in a blow to European calls for greater co-operation in addressing the problem of world steel overproduction, the ITC embarked this week on a series of hearings with interested parties in the US to determine whether protectionist measures should be imposed. The final decision will rest with president George Bush, whose own political success owes much to the support of the steel industry.

The move toward sanctions poses a direct threat to the UK’s already hard-hit steel industry, which has been forced to shed more than 12,000 jobs in the last year alone. Anglo-Dutch steel manufacturer Corus exports 1.3m tonnes of steel to the US, of which 880,000 tonnes are under threat from possible sanctions. Almost 200,000 tonnes of that is manufactured in the UK, said a company spokesman.

‘The reality is that US steel imports have been falling, and that is a reason for not imposing duties. We don’t know what the outcome will be. Ultimately it’s down to a political decision by the president.’

The ITC is due to make its recommendations on possible ‘remedies’ to the president on 19 December. He will then have 90 days in which to respond. That means the sanctions could be imposed in March next year.

Any barriers to UK-made steel would affect Corus’s Teesside, Skinningrove, Rotherham and Stockbridge plants. The Teesside and Rotherham plants have already suffered thousands of job losses as the company slashed back capacity this year.

Knock-on effect

Further reductions in steel sales are of concern to trade unionists. A spokesman for the Iron and Steel Trade Confederation explained that the US government’s actions were being monitored carefully.

‘It’s something we’ve known about for a while. We are fully aware of what is happening. It’s a serious situation and we understand that. What the knock-on effect is, is hard to say,’ he said.

The ITC began an investigation into the alleged ‘dumping’ of cheap imports in the US in June at the request of George Bush’s office. The imposition of a so-called ‘global safeguard’ does not require the finding of an unfair trade practice, such as dumping.The commission’s responsibility is simply to decide whether a product is being imported in such quantities that it is deemed a substantial cause of ‘serious injury, or threat of serious injury’ to any US industry sector.

The commission concluded that, of the 33 steel product categories being imported, 12 were ‘a substantial cause of serious injury or threat’. Those 12 represent about 27m tonnes, 74% of all US imports of steel.

The European Confederation of Iron and Steel Industries, Eurofer, attacked this decision. ‘The problems of the US steel industry essentially come from its inability to close uneconomic facilities… and to adapt to the globalisation of the world steel market,’ it said.

Eurofer has also challenged the ITC on its categorisation of steel products, arguing it goes against World Trade Organisation rules. If the US government imposes any sanctions, Eurofer will ask the European Union to take up the issue at the WTO.The imposition of sanctions on products that are not being dumped on the US market, but are simply doing well enough to pose a threat, is rare.

The last time a US administration requested a Global Safeguard investigation was in 1985 and involved apple juice imports. Prior to that there was a stainless steel investigation in 1982 and a mushroom investigation in 1976. As well as the president, the House committee on ways and means, the Senate committee on finance and individual companies can ask for imports to be investigated.